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DQTB & Anor v FC of T – Carrying on a business



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As tax professionals, it’s essential that we keep ourselves updated with recent cases and their implications.

In a recent case, two individual taxpayers who owned a property in Tasmania set up a company to run a grazing business.

The company paid the individuals an agistment fee of $20,000 per annum, which they loaned back to the company.

The taxpayers claimed significant tax deductions for expenses related to carrying on a business, but the Commissioner limited deductions to the agistment income of $10,000 each.

The key issue under consideration was whether the taxpayers were carrying on a business.

As tax professionals, we know that it’s not necessarily any one factor that determines whether a business is being carried on, but a combination of all the facts and circumstances.

Factors that pointed in favour of carrying on a business included a degree of systematic, business-like behaviour and a reasonable fee for agistment.

However, factors against carrying on a business included absence of a profit-making purpose, an uncommercial arrangement for payment of the fee, and lack of evidence of agreed care services.

This case is a good reminder of the importance of carefully considering all the relevant facts and circumstances when deciding whether an entity or individual is carrying on a business.

It highlights that having a profit-making purpose, conducting transactions in a commercial manner, and maintaining proper documentation are crucial in demonstrating that a business is being carried on.

If you have any questions, please feel free to reach out.

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While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

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